The Bombay High Court has held that an Enforcement Directorate arrest under Section 19 of the PMLA must strictly satisfy the statute’s safeguards, the recorded ‘reasons to believe’ and the grounds of arrest, or it is illegal. Finding those conditions not met, the Court quashed the remand and granted the accused bail, while making clear it expressed no view on the merits of the money-laundering case.
Mumbai: The Bombay High Court has granted bail to a man arrested by the Enforcement Directorate (ED) in a money-laundering case, holding that his arrest under Section 19 of the Prevention of Money Laundering Act, 2002 (PMLA) was illegal for non-compliance with the statutory safeguards, and quashing the remand orders passed by the Special Court [Rajendra Narpatmal Lodha v. Directorate of Enforcement].
Justice Milind N. Jadhav allowed the writ petition, which sought the quashing of the remand order and the petitioner’s release on bail.
The case
The ED had registered an ECIR based on two FIRs and, in the course of the proceedings, arrested the petitioner, invoking its power under Section 19 of the PMLA, and obtained his remand from the Special Court. The petitioner challenged the arrest and the successive remand orders as illegal, contending that the mandatory safeguards attaching to the power of arrest under Section 19 had not been complied with, and sought to be released on bail on that ground.
The Section 19 safeguards
The Court set out the exacting conditions that Section 19 imposes on the power to arrest. The authorised officer must, on the basis of the material in his possession, form and record in writing his “reasons to believe” that the person is guilty of an offence under the PMLA, and must inform the arrestee of the “grounds of arrest” as soon as may be. These, the Court held, are not empty formalities but statutory safeguards designed to prevent the misuse of a drastic power, and their observance is a condition of a valid arrest.
Crucially, the Court affirmed that the legality of an arrest under Section 19 is open to judicial review. Drawing on the Supreme Court’s decisions in Pankaj Bansal v. Union of India, Prabir Purkayastha v. State (NCT of Delhi) and Arvind Kejriwal v. Directorate of Enforcement, it reiterated that a court can examine the existence and soundness of the “reasons to believe” on which an arrest is founded, and that non-compliance with the safeguards renders the arrest illegal and entitles the arrestee to be released. The power to arrest, it emphasised, can be exercised only where the statutory conditions are strictly met, and not on the mere ipse dixit of the officer.
The finding, and the relief
Applying these principles to the record, the Court found that the safeguards under Section 19 had not been complied with in the petitioner’s case, so that the arrest, and the remand that followed, could not be sustained. It held that the petitioner had made out a case for the reliefs sought, allowed the petition in terms of the prayers challenging the remand, and directed his release on bail on a personal bond, subject to conditions, including reporting to the investigating officer, surrender of his passport, and undertakings not to leave the country without permission, influence witnesses or tamper with evidence.
The Court clarified that its observations were limited to the purpose of granting bail, and that it had made no observation on the merits, the trial to be decided strictly on its own evidence, uninfluenced by any prima facie observation in the order.
Why it matters
The decision reinforces the now-settled principle that the ED’s power to arrest under the PMLA, however wide the statute’s reach, is hedged by safeguards whose breach is fatal to the arrest. Section 19 does not permit arrest at the discretion of the officer; it requires a recorded satisfaction, grounded in material, that the person is guilty, and the communication of the grounds of arrest, so that the arrestee can meaningfully challenge his detention. Where those requirements are not met, the arrest is illegal, and the remedy, as the Supreme Court has held, is the release of the arrestee.
Equally significant is the Court’s affirmation that the legality of a PMLA arrest is judicially reviewable. The “reasons to believe” are not beyond scrutiny merely because they are the subjective satisfaction of the officer; a court can examine whether they exist and are founded on material, subject to the officer’s entitlement to appropriate redactions where disclosure would prejudice the investigation. This judicial check is what gives the Section 19 safeguards their content, an arrest that cannot survive that scrutiny will not be allowed to stand.
The order is confined to the legality of the arrest and the consequent grant of bail; it decides nothing about whether the petitioner committed the offence of money laundering, and the Court was careful to say so. The money-laundering allegations remain to be tested at trial, on their own evidence, and the petitioner, released on bail, is entitled to the presumption of innocence. What the case establishes is the narrower but important proposition that the ED must observe the statutory conditions when it arrests, and that a failure to do so will cost it the arrest.
Case Title: Rajendra Narpatmal Lodha v. Directorate of Enforcement, Mumbai and Another [Writ Petition No. 1910 of 2026]
Bench: Justice Milind N. Jadhav, High Court of Judicature at Bombay | Neutral Citation: 2026:BHC-AS:38365
Date of Order: September 21, 2026
Appearances: Senior Advocate Aabad Ponda, with others, for the petitioner; Additional Solicitor General Anil Singh, with others, for the ED.
Status: Writ petition allowed. Arrest under Section 19 PMLA held illegal for non-compliance with statutory safeguards; remand quashed and petitioner granted bail on conditions. No view expressed on the merits of the money-laundering case.